The Effects of Social Comparison and Subjective Financial Well-Being on Subjective Well-Being

Abstract

Existing research on the antecedents of subjective well-being (SWB), which comprises life satisfaction and happiness, remains inconclusive. Some studies suggest that increasing income enhances SWB, while others emphasize the role of income comparison within reference groups in influencing SWB. The role of subjective financial well-being in enhancing subjective well-being is also inconclusive. On the one hand, financial well-being may contribute to increasing SWB; on the other, subjective financial well-being is a characteristic compared to reference groups, and this comparison is what influences SWB. This study, therefore, sets out to answer the question: How does social comparison and subjective financial well-being influence SWB? We predict that social comparison influences SWB (life satisfaction and happiness) through the mediation of subjective financial well-being. Data from 3,591 respondents (1,750 females, 1,841 males, aged 21 – 60 years; M = 30.81, SD = 7.51) in the Indonesian Family Life Survey (IFLS 5) were analyzed using path analysis. The measures in this study include financial well-being, life satisfaction, happiness, and social comparison taken from IFLS-5 Book III A. The research findings indicate that social comparison does not directly influence life satisfaction and happiness. However, the influence of social comparison on both is mediated by subjective financial well-being. The practical implications of this research suggest that individuals who are happy and satisfied with their lives need to have at least one satisfying life domain, such as financial well-being, and focus on subjective self-evaluation rather than constantly comparing themselves with reference groups.